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Lease car finance is borrowed and repaid at a regular, usually monthly, rate and covers only a portion of the leased car’s value. Those leasing cars will also be paying a depreciation charge which covers the reduction in the vehicle’s value during the period it is being leased.
Leased car finance builds no equity over the course of the lease, with the only possibility of long term gains being if there is an option for the car to be purchased outright at the end of the agreement. An end of agreement purchase does however raise the cost to more than would have been originally paid upfront for the car. Despite these drawbacks, many drivers may have financial or other reasons for leasing rather than purchasing a car.
In many cases, leased car finance deals allow for the upgrading to a new vehicle once the original lease expires. They can also include provisions for repair, insurance and maintenance.